2/1/2008 Volvo CE increases number of machines sold by 72% during 2007

A strong fourth quarter helped Volvo CE to its most successful year ever, one that saw record sales, number of units sold, major acquisitions and over 140 machines added to its product offering.

Announcing its fourth quarter and full year results, Volvo Construction Equipment (Volvo CE) passed several important milestones during 2007.  The company exceeded sales of SEK 50 billion and operating income passed the SEK 4 billion mark. The product offering increased by 100 products from acquired companies, while at the same time new generations of existing machinery were launched – adding a further total of 46. Including acquisitions, the number of machines sold for the year increased by 72% to 64,000 units, up from 37,000 in 2006.

Commenting on the results, Volvo CE’s chief executive Mr. Tony Helsham said: “2007 was a year of unprecedented organic growth and acquisitions. We have succeeded in establishing a strong foothold in Asia through the acquisition of Lingong and entered into the road equipment business as one of the world’s leading manufacturers. Our focus in 2008 is on improving profitability, and to do this we will work on active price management, improving industrial productivity and cutting costs.”

For the full year 2007 Volvo CE’s sales increased by 27% to SEK 53,633 M (42,131 M), while operating income jumped by 4% to SEK 4,218 M, up from 4,072 M in 2006. Operating margin was 7.9% in 2007, down from 9.7% in the preceding year due to a combination of increased production costs, introduction of new components, integration costs and exchange rates.

These record figures were helped by a strong set of fourth quarter results. Net sales in the fourth quarter were up 39% and amounted to SEK 15,523 M (SEK 11,170 M in 2006). When adjusted for changes in the exchange rates and the acquisitions of Lingong and Ingersoll Rand’s road division, net sales rose by 23%.

Market fluctuations
The fourth quarter of 2007 saw the total world market for construction equipment within Volvo CE’s product range increase by 12% compared to the same period in 2006. The North American market was down by 7% in 2007, largely due to lower activity in the US housing construction market. This decline was offset by rises of 4% in Europe, 24% in Asia (with China rising 76%) and 40% in Other International Markets.

The outlook for 2008 is expected to remain favourable, although not as good as 2007. The European market is expected to continue to grow in the range of 0-5%. North America is expected to decline between 5-10% while the rest of the world is expected to compensate for the US downturn with growth of between 10-15%.

Volvo CE’s order bookings remain strong, with a total value of the order book on December 31st some 48% higher than on the same date a year earlier, excluding Lingong and Ingersoll Rand’s road equipment division.

Table 1. Volvo Construction Equipment, net sales by market area, in Millions of Swedish Krona

 

 

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